Construct a spreadsheet to compute the costs and benefits of buying a vehicle with all-wheel-drive (AWD). Assume that the vehicle you have decided to purchase is available for $24,000 without AWD and for $25,500 with AWD. Assume that you expect to own the vehicle for 7 years. Assume that the vehicle will have a resale value at the end of 7 years equal to $7,000 without AWD and $7,200 with AWD. Assume gas mileage is 30mpg without AWD and 27mpg with AWD. Assume gasoline prices will amount to $3.60 per gallon over the next 7 years. Assume that you expect to drive the car 18,000 miles per year. Assume that the AWD feature is useful 12 days a year, when there is a snowstorm and the AWD eliminates the need to shovel snow around the car wheels. Assume that each day that you have to shovel your car out of the snow because it does not have AWD costs you $20 worth of hassle. Assume a discount rate of 5%.

(a) Given the assumptions above, what is the NPV of the AWD option?

(b) For what gasoline prices and/or annual miles driven would the NPV of the AWD option be positive?